Cells of animals, plants, fungi and protists respond to the presence of intracellular double stranded RNA (dsRNA) by a conserved mechanism (the RNAi machinery), which cleaves dsRNA to small interfering RNAs (siRNAs). While this mechanism likely originated as a defense against invading RNA viruses and transposable elements, similar machineries are used in a variety of important cellular processes to produce specific intracellular RNAs involved in degradation of aberrant transcripts, developmental regulation of utilization of specific mRNAs, heterochromatic silencing, centromere function and maintenance of genome stability by suppression of activity of transposable elements. Genome rearrangement in Tetrahymena involves elimination of about 15% of the genome by reproducible interstitial deletions that occur during development of the somatic macronucleus from the germline micronucleus. This process is controlled by small RNAs that target the sequences for elimination using an RNAi-related mechanism that resembles heterochromatin formation in other eukaryotes. The properties of these small RNAs explain how specific sequences are targeted for elimination and how the primary sequence of the parental macronucleus epigenetically controls genome rearrangement in the new macronucleus. This system provides the first demonstration of an RNAi-mediated process that directly alters DNA sequence organization. Methylation of histone H3 on lysine 9 and accumulation of chromodomain proteins, hallmarks of heterochromatin, also occur specifically on sequences undergoing elimination and are dependent on the small RNAs. These observations contributed to a new paradigm of chromatin biology: targeting of heterochromatin formation by RNAi-related mechanisms in eukaryotes. The elimination process occurs sequentially and can be highly synchronized in a large number of cells. Utilizing recently developed methods for facile gene replacement in either or both the somatic and/or germline nucleus, protein tagging, tandem affinitiy purification and the nearly complete Tetrahymena macronuclear genome sequence, we propose to characterize the molecular mechanism of small RNA-mediated genome reorganization. These studies should shed light on other RNAi- like processes that are important for normal development and maintenance of genome stability in multicellular organisms. [unreadable] [unreadable] [unreadable]